NCAA Sues Insurers for Defense Costs

CHICAGO (CN) – Beset by numerous lawsuits from student-athletes seeking more compensation for their play, the NCAA is suing its insurers for litigation costs. In a complaint filed in the Marion Superior Court in Indiana, the NCAA says its insurers the Federal Insurance Company, Illinois National Insurance Company, Westchester Fire Insurance Company, and XL Specialty Insurance Company have a duty to cover the costs associated with its various defenses. The NCAA purchased insurance policies related to pending actions against it in 2005, and them again in 2012, the lawsuit says. The association faces a number of pending major lawsuits from student-athletes who want more compensation for their play. One involves three certified classes of NCAA student-athletes, and challenges the association’s rules capping the amount of compensation and benefits the players can earn while enrolled in college. The other claims the NCAA and Division I schools violate the Fair Labor Standards Act by failing to pay student-athletes at least minimum wage. The NCAA seeks to recover defense costs spent litigating these lawsuits, but its insurers claim that both suits “are so similar to allegations made in a previous suit as to be ‘related wrongful acts’ as defined under the 2012-2014 policies, and thus coverage is only provided, if at all, under the 2005-2006 policies.” This previous suit is unnamed in the complaint, but likely refers to that led by former basketball star Ed O’Bannon, and sought cash compensation for players, not just tuition coverage. A divided Ninth Circuit panel ruled for the NCAA last year, finding that “not paying student-athletes [in cash] is precisely what makes them amateurs.” O’Bannon’s motion for en banc rehearing remains pending. The association seeks court intervention to clarify the insurer’s obligation to pay the NCAA’s defense costs. It is represented by George Plews with Plew, Shadley, Racher & Brown LLP in Indianapolis. Plews declined to comment on the case, and deferred to NCAA counsel Scott Bearby, who did not immediately respond to a telephone and emailed request for comment.